Reflections on Consolidation in the Seed Industry

CHAMPAIGN, IL – Those of us who work in the global seed industry take particular interest in the recent, almost continuous news cycle focused on consolidation of the larger participants in the industry. With all of the “Big Six” engaged in some level of discussion regarding potential transactions, some historical perspectives on the evolution of the world’s most valuable seed market, U.S. seed corn, are timely.

When I first became involved in the seed industry in early 1983, Pioneer Hi-Bred International was a publicly traded company that dominated the United States (if not the global) seed industry. At that time, the U.S. seed corn industry was amusingly referred to as “snow white, the seven dwarfs and the 300 elves.” By the early 1990’s, Pioneer was the clear industry leader with a seed corn market share of over 40%. DeKalb Genetics Corporation, also a publicly traded company but with significant ownership by the Roberts family, was a distant second with a U.S. seed corn market share that had dropped to 9% from approximately 23% in 1974.

Of course, times have changed. The introduction of biotechnology-derived traits in the mid-1990’s set off another agricultural revolution that has greatly benefitted farmers and radically changed the seed industry. At about the same time that the first traited seed products were introduced to American farmers, Monsanto acquired Holden’s Foundation Seeds, Corn States, and Asgrow, and a short time later acquired DeKalb. Later that same decade, DuPont acquired Pioneer. It took a few years for DuPont and Monsanto to digest those acquisitions and for farmers to widely adopt the use of traited seed corn and soybean products.

In 2004, Syngenta acquired Golden Harvest and Garst, which then set off a frenzy of consolidation in the U.S. seed industry. The large trait development companies wanted to control their channel to market and, thus, set upon a strategy to acquire many privately-owned branded seed marketing and distribution companies. The consolidation trend extended from seed corn, to cotton, to soybeans, to wheat, to alfalfa, and then to sunflowers and other crops as technology and traits were extended to benefit a wider array of crops.

From 1988 through 2015, approximately 75 major acquisitions were made by Monsanto, Dow AgroSciences, DuPont, Syngenta, and AgReliant (owned by Groupe Limagrain and KWS). Of those acquisitions, roughly 25 brands were retired. Monsanto led the way during that period by making over 30 acquisitions and subsequently retiring more than 15 of the acquired brands.

Over the last 25 years, there has been a drastic reduction in the number of companies marketing seed corn in the U.S.

During this period, retail seed corn prices have increased from approximately $65 per bag to over $300 for multi-stack traits. Soybean prices, over the same time-frame, have increased from $12-$15 per unit to over $70. These price increases reflect the benefits delivered through biotechnology as well as enhanced crop protection through seed treatments. The farmer has derived significant benefits from these technological developments that make the price increases well justified. It can also be argued that these new product offerings have allowed growers to be more efficient and more environmentally responsible as they are using less chemicals and making fewer passes over their fields.

As we speculate on the further consolidation of the global crop protection, seed and trait companies, it is interesting to look back on the U.S. seed industry and reflect on the immense changes and consolidation that has taken place. For the younger participants in the industry, a reminder of the changes that have occurred over the past 25-30 years may help to put the current consolidation activities into a better prospective. There have been many changes that have taken place, and, no doubt, there are more interesting and surprising changes yet to come.

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